Downtown revitalization has become a focal point for Stayton’s city government. With that in mind, the city council passed an ordinance June 5, establishing a Vertical Housing Development Zone (VHDZ).

In January, the council first heard a report from city Planning and Development Director Dan Fleishman promoting downtown development via a vertical housing zone. The zone would provide tax incentives to downtown multi-story development projects with mixed-use plans combining residential and commercial use.

At the time, Councilor Priscilla Glidewell told the council she had witnessed similar programs rejuvenate old downtown areas, and that she would advocate pursuing such in Stayton. Since that meeting, city staff and the council have worked out designation of the zone, and on June 5, Fleishman presented the ordinance to the council for its second consideration.

Roughly, the new VHDZ would include the downtown area north to south between East Washington and Water streets and east to west between Second and Fourth.

“What a Vertical Housing Development Zone does is provide a partial exemption from property taxes for new or renovated multi-story buildings that are both commercial and residential in use,” Fleishman told the council.

“As proposed, the area for which the partial property tax exemption would be available is the designated downtown area with the mixed-use zones according to the official zoning map, but the ordinance sets up a procedure, should this council or future councils want to establish other vertical housing development zones.”

Oregon state statute authorizes a city to designate an area within the city as a vertical housing development zone, and the establishment and operation of a VHDZ is controlled by law. The property tax exemption would vary in accordance with the number of residential floors on a project, and the maximum exemption is capped at 80 percent of the value of improvements for a ten-year period.

The exemption is available for both new construction and renovation of existing structures. To qualify, a renovation must increase the value of the existing structure by 20 percent or more. The assessed value of land is not impacted by the exemption.

According to Fleishman’s report, about eight existing multi-story mixed-use (or potential for mixed-use) buildings in Stayton’s downtown core could be certified under the program. He said the fiscal impacts of the partial exemption, however, are difficult to estimate.

“This has a possibility of really doing some things for the downtown,” Mayor Hank Porter said. “People actually living down here, that means more stores, food stores, more restaurants.”

Asked last week if he sees any vertical housing projects within the zone starting up any time soon, Fleishman said, “Soon is a little nebulous.” He has, however, held discussions with individuals about potential projects that the VHDZ could assist. He said Stayton could expect to see a vertical housing project in the downtown area within two to three years.

The Deidrich Building at the corner of Third and Florence streets is a prime example of the older buildings in the downtown area that qualify for upgrades. Fleishman said the vacant space behind the building could be developed as new multi-use downtown property.

According to a registration form with the National Register of Historic Places, the Deidrich Building, built in 1912, typifies the commercial buildings of the period, with a first floor devoted to retail and the second to residential and office space. Eleven buildings of concrete block were put up during a period of eight years in downtown Stayton. Nine of these, including the Deidrich, survive along three blocks of Third Avenue. They represent a nearly unprecedented concentration of “Early Twentieth Century Commercial” examples of concrete stone building.

The Deidrich Building was among the Oregon Main Street projects recognized in 2017 as an “Excellence in Downtown Revitalization” award winner. Over the years, it has housed Stayton’s first car dealership, a five and dime store, grocery store, and a mens clothing store.

Promoting the vitality of the old downtown by bringing in new development activity is a goal of the VHDZ plan, and Fleishman said he’d like to see new commercial businesses established within the zone.

“The demand for commercial space is probably the toughest part of the issue,” he said. “Part of the city’s downtown strategy is that investment in close-in and downtown residential properties should spur demand for commercial activity.”